The Fiscal 2006 The Fiscal 2006 First Informational Meeting First - - PDF document

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The Fiscal 2006 The Fiscal 2006 First Informational Meeting First Informational Meeting

Operation Overview and Strategy Summary Operation Overview and Strategy Summary

June 2, 2006 June 2, 2006 June 2, 2006 June 2, 2006

Cautionary Statements

Any statements about Mitsui Sumitomo Insurance Co., Ltd.’s future plans, strategies, and performance contained in this brochure that are not historical facts are meant as, or should be considered as, forward-looking statements. These forward-looking statements are based on the Company’s assumptions and opinions in the light of the information currently available to it. The Company wishes to caution readers that a number of uncertain factors could cause actual results to differ materially from those d i s c u s s e d i n t h e f o r w a r d - l o o k i n g s t a t e m e n t s . S u c h f a c t o r s i n c l u d e , b u t n o t l i m i t e d t o , (1) general economic conditions in the Company’s markets, (2) competitive conditions in the insurance business, (3) fluctuations of foreign currency exchange rates, and (4) government regulations, including changes in the tax rates.

Cautionary Statements Cautionary Statements

Any statements about Mitsui Sumitomo Insurance Co., Ltd.’s future plans, strategies, and performance contained in this brochure that are not historical facts are meant as, or should be considered as, forward-looking statements. These forward-looking statements are based on the Company’s assumptions and opinions in the light of the information currently available to it. The Company wishes to caution readers that a number of uncertain factors could cause actual results to differ materially from those d i s c u s s e d i n t h e f o r w a r d - l o o k i n g s t a t e m e n t s . S u c h f a c t o r s i n c l u d e , b u t n o t l i m i t e d t o , (1) general economic conditions in the Company’s markets, (2) competitive conditions in the insurance business, (3) fluctuations of foreign currency exchange rates, and (4) government regulations, including changes in the tax rates.

2

• Ensure adequacy and stability of the group capital by reducing constantly the position of equities held for

corporate customer relation purpose

• Seek for more effective use of capital (optimal allocation and investment in the promising businesses)
• Make efforts to return to shareholders roughly 40% (=(cash dividends+share buyback) / Group Core Profit)

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Challenge 10: Basic idea revised and 5 Reforms in Stage I Challenge 10: Basic idea revised and 5 Reforms in Stage I

Corporate quality improvement placed to base Corporate quality improvement placed to base

Revision point in Stage I Revision point in Stage I

Numeric targets revised for fiscal 05 and onwards Numeric targets revised for fiscal 05 and onwards

The 5 Reforms The 5 Reforms

Buildup of a network of 50,000 agents by Mar 08; Marketing Conduct and Agent Business Process Reforms Emergency workforce in place; New system development “Universal component designing” in the products, systems and operation process Personnel management, echelon and workforce in line with MSI Group strategy Slim-down through server integration, etc. Sales Network Reform Sales Network Reform Claims-handling Claims-handling Service Reform Service Reform Product Reform Product Reform Human Resources Human Resources Reform Reform System Architecture System Architecture Reform Reform

Marketing Marketing Innovation Innovation Claims-handling Claims-handling Service Innovation Service Innovation Operational Operational Innovation Innovation

Challenge 10 Challenge 10 Challenge 10

Toward higher corporate quality Toward higher corporate quality

Reviewing the basic idea in response to the underpayment mistakes which were found last year, MSI has determined to place the challenge to corporate quality improvement for the base of the 5 Reforms.

Corporate quality Corporate quality

• Promote CSR activities consistent throughout the office network inside and outside Japan; Raise awareness of

the Charter of Professional Conduct and further extend practices based on it.

• Earn higher trusts form the 7-category stakeholders by increasing dialogue with them, etc.
• Build a CSR management system, including formulating MSI’s original assessment criteria, etc.

Proactive, company-wide CSR activities based on the Charter of Professional Conduct

• Define specific CS indicators, set a target with them, and seek company-wide for higher CS performance
• Offer top-quality products and services to customers by creating and maintaining strong ties with agents
• Build a claims-handling system of best CS performance by excellent response to accident reporting customers

as well as accurate and quick reimbursement to customers’ claims.

Better customer satisfaction (“CS”) and stronger trust from customers

• Fully accountable to protect policyholders first, and well-disciplined legal compliance staff in the life and non-life

insurances

• Ensure legal compliance practices based on the Charter of Professional Conduct
• Evolve the monitoring function of the Risk Control Dept.; Establish an advanced control network working

accordingly to the measured risk volumes by line of business

• Keep internal control tight by adjusting the frameworks of the risk control and the legal compliance

Tighter risk control and further reach of legal compliance Higher corporate quality by conducting the capitalization policy

• Ensure separation of the management and execution functions for the board of directors to function better in the

monitoring and supervision and to more concentrate themselves on auditing.

• Outside directors and outside auditors to increase transparency in making decisions
• Build a management system to seek for optimization of group corporate value
• Get appropriately prepared for the rapidly increasing disclosure requirements

Tighter corporate governance Making efforts to be a world-top performer in every aspect of corporate quality

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CSR commitment: To improve corporate quality CSR commitment: To improve corporate quality

Used as guideline of behavior by employees. Listens to the stakeholders’ voices sincerely to reflect in doing a better job. The MSI CSR Score Management developed and used for the half-yearly assessment

Explicitly states the management’s commitment and employees’ preparedness

Chairs the network committee in Japan

MSI Group conduct charter formulated MSI Group conduct charter formulated Weight on workplace meetings + dialogue Weight on workplace meetings + dialogue Objective assessment challenge Objective assessment challenge Stationary measurement by CSR Stationary measurement by CSR accounting; Issuing CSR report accounting; Issuing CSR report Among leaders of UN Global Compact Among leaders of UN Global Compact

Corporate quality improvement Corporate quality improvement Corporate value increase Corporate value increase

• Trust from customers is shaken by the underpayment mistakes revealed last year, followed by the troubles due to

the insufficient explanation in the brochures of saving-type insurance.

• As counter-measure, MSI is holding CSR meetings, focusing on how to re-establish customers’ trust, at every

workplace during the first half of this fiscal year.

• Specifically speaking, the focused issues are (1) what MSI is now deemed like and (2) what we at MSI have to be

like in order that it should win high esteem and we are proud of working for it.

Issues at CSR meetings for fiscal 2006 Issues at CSR meetings for fiscal 2006

CSR initiative management CSR initiative CSR initiative management management Strengthening internal control Strengthening Strengthening internal control internal control Disclosure; Two-way communication Disclosure; Disclosure; Two-way Two-way communication communication

Legal compliance, risk control, crisis management and corporate governance Customers Shareholders Environment Agents Local and global communities Business partners Employees CSR activities to promote trust with the 7-category stakeholders Understanding, linking, and implementing the MSI Group charter in daily business activities; Holding workplace meetings; Improving training and communication Making CSR an integral part of the Making CSR an integral part of the corporate culture corporate culture

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Long-term vision “Challenge 10” Long-term vision “Challenge 10”

Expand the 5 major businesses to optimize Group Core Profit ( Expand the 5 major businesses to optimize Group Core Profit (“GCP GCP”) Y64 bn Group Core Profit Group Core Profit

Results for fiscal 2003 Results for fiscal 2003

Y12,500.- Nikkei average 110 yen/$ Forex rate 2.3% 10-year JGB yield Assumptions Assumptions

Domestic non-life insurance Domestic non-life insurance Y50.5 Y50.5 bn bn (79%) (79%)

Life insurance Life insurance Y4.0 bn (6%) Y4.0 bn (6%) Overseas business Overseas business Y8.6 bn (14%) Y8.6 bn (14%)

Financial and risks Financial and risks Y0.9 bn Y0.9 bn (1%) (1%)

Y100 to 120 bn Group Core Profit Group Core Profit

Plan for fiscal 2010 Plan for fiscal 2010 Domestic non-life insurance Domestic non-life insurance (55%) (55%)

Overseas business (20%) Overseas business (20%) Life insurance (20%) Life insurance (20%)

Financial and risks (5%) Financial and risks (5%)

Marketing, Claims-handling Service and Operational

Amount of increase in consolidated net

premiums written :

1st

Amount of non-consolidated net premiums written

2nd

Gross premiums and net income from overseas:

1st

Profit amount from life insurance (=MSI Kirameki +

MS MetLife) among non-life insurers : 1st

Combined ratio

1st

Rate of investment return

1st

Group core ROE

7%

The 7 strategic targets The 7 strategic targets Key words in Challenge 10 Key words in Challenge 10

Three Types of Innovation Three Types of Innovation

Personnel system, organization and lines, and human resources development

Personnel management, echelon, workforce in line with strategy Personnel management, echelon, workforce in line with strategy

Customer satisfaction (“CS”) improvement, capitalization policy, risk control, legal compliance and corporate governance

Corporate quality improvement based on CSR framework Corporate quality improvement based on CSR framework

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Net income in financial accounting terms and Group Core Profit (“GCP”) definition Net income in financial accounting terms and Group Core Profit (“GCP”) definition

Difference between net income in financial accounting terms and GCP: Difference between net income in financial accounting terms and GCP: Image of reconciliation by components Image of reconciliation by components

Definition of GCP Definition of GCP

Consolidated net income Consolidated net income Net capital gains on equities Net capital gains on equities Net revaluation gains on credit derivatives Net revaluation gains on credit derivatives Other special factors Other special factors Net income from life i subsidiaries Net income from life i subsidiaries MSI Kirameki’s net income before net level premium (“NLP”) reserves MSI Kirameki’s net income before net level premium (“NLP”) reserves Equity in earnings from MS MetLife (US GAAP) Equity in earnings from MS MetLife (US GAAP) Others Others

Net income Net income Group core profit Domestic non-life Domestic non-life Domestic non-life Life insurance Life insurance Life insurance Overseas Overseas Overseas Financial and risks Financial and risks Financial and risks

MSI Kirameki : net income before NLP reserves; MS MetLife : equity in earnings by the US GAAP Non-consolidated affiliates, etc. Consolidated subsidiaries + MSI’s u/w accounts

• Net capital gains on equities,

net revaluation gains on credit derivatives and other special factors

Bookings to MSI’s a/c, equity in SMAM, MSIVC’s a/c, etc.

Overseas subsidiaries Overseas reinsurance subsidiaries Underwritings booked at MSI’s overseas branches

Overseas business Overseas business

A network of 733 sales offices, approx. 59.000

agents and 257 claims-handling service stations in Japan

Domestic non-life Domestic non-life

Mitsui Sumitomo Kirameki Life Insurance Company,

Limited: a wholly-owned subsidiary handling mostly death benefit insurance

Mitsui Sumitomo MetLife Insurance Co., Ltd.: a

joint venture (51% owned by MSI and 49% by MetLife) handling mostly variable annuity insurance

Life insurance Life insurance

Sumitomo Mitusi Asset Management Co., Ltd. Mitusi Sumitomo Insurance Venture Capital Co., Ltd. Weather derivatives, financial guarantees and 401(k)

servicing booked to MSI’s a/c

Financial services Financial services

Inter-Risk Research Institute & Consulting Inc.:

a risk management consulting firm

Mitsui Sumitomo Insurance Care Network Co., Ltd.:

a health care services provider

American Appraisal Japan Co., Ltd.:

a general appraisal consulting firm

Interpartner Assistance Japan, Ltd.

Risk-related business Risk-related business

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1,484.0 1,518.0 (+3.3%) 1,469.7 (+4.7%) 1,461.0 (+4.1%)

Group performance in Stage I, Challenge 10 Group performance in Stage I, Challenge 10

Targets and results for fiscal 2005 and 2006 Targets and results for fiscal 2005 and 2006

Stage I Stage I Consolidation Consolidation

Net premiums written; Annual growth ratio (%) Net premiums written; Annual growth ratio (%)

FY2005 forecast FY2005 forecast FY2005 results FY2005 results FY2006 original target FY2006 original target FY2006 plan FY2006 plan

(Y bn)

84.0 80.5 73.9 78.3 Group core profit Group core profit 5.6% 3.9% 4.2% 5.0% ROE (GCP basis) ROE (GCP basis)

GCP by business line GCP by business line

59.7 58.2 64.2 66.6 Domestic non-life insurance Domestic non-life insurance

FY2005 forecast FY2005 forecast FY2005 results FY2005 results FY2006 original target FY2006 original target FY2006 plan FY2006 plan

10.0 11.0

• 1.4

2.8 Overseas business Overseas business 12.5 9.5 8.5 7.3 Life insurance Life insurance 1.8 1.8 2.6 1.7 Financial and risks Financial and risks

(Y bn)

4.7% 66.4

“ “No. 1

• No. 1”

” targets in Stage I targets in Stage I

1st Increased amount in consolidated net premiums written

Targets for fiscal 2006

1st Annual growth ratio of net premium from domestic non-life insurance 1st Gross premiums and net income from

• verseas

1st Kirameki’s annual growth ratio of in-force life insurance 1st Combined ratio 1st Income return on investment management

Non-life insurers Non-life insurers’ consolidated net premiums written for FY 2005 consolidated net premiums written for FY 2005 Increase (Y bn)

MSI

Growth ratio

2.8% 53.5

Company A

1.3% 18.5

Company B

1.0% 8.2

Company C

• 1.5%
• 10.6

Company D

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Non-consolidated performance in Stage I, Challenge 10 Non-consolidated performance in Stage I, Challenge 10

1,340.0 1,360.0 (+1.6%) 1,338.4 (+2.2%) 1,336.0 (+2.0%)

Targets and results for fiscal 2005 and 2006 Targets and results for fiscal 2005 and 2006

Stage I Stage I Non-consolidation Non-consolidation

Net premiums written; Annual growth ratio (%) Net premiums written; Annual growth ratio (%)

FY2005 forecast FY2005 forecast FY2005 results FY2005 results FY2006 original target FY2006 original target FY2006 plan FY2006 plan

(Y bn)

91.8% 92.1% 90.5% 91.3% Combined ratio Combined ratio 61.6% 61.2% 59.7% 60.4% Net loss ratio Net loss ratio 30.2% 30.9% 30.8% 30.9% Net expense ratio Net expense ratio 52.0 75.0 79.1 64.4 Interest and dividend income Interest and dividend income 68.5 70.0 64.8 64.0 Net income Net income

Note: “Net premiums written” exclude those of Modorich but include the effect caused by the abolished governmental reinsurance of the compulsory automobile liability insurance (“CALI”).

57.8% 57.2% 57.2% 64.0% 59.7% 61.2% 55% 57% 59% 61% 63% 65% 2001 2002 2003 2004 2005 2006 Net loss ratio Net loss ratio

Non-life insurers Non-life insurers’ non-consolidated net premiums written for fiscal 2005 non-consolidated net premiums written for fiscal 2005

2.2 % MSI 0.5% Company A 1.4% Company B 0.8% Company C

• 2.0%

Company D

(Growth rate) (Growth rate) (FY)

8

8 4.3 0.9 1.3

• 0.8

1.5

• 4.4

5.4

• 2.6

8.2 1.0 2.4 3.2

• 6
• 4
• 2

2 4 6 8 10 12 8.7 51.9 29.8 34.7 54.0 14.8 66.6 36.0 93.3 34.5 53.7 17.8 20 40 60 80 100

Group businesses: Overseas business (1) Group businesses: Overseas business (1)

Net premiums written Net premiums written

*The figures stated above do not include consolidation adjustments, etc. pertaining to mergers and acquisitions.

Net income Net income

(FY) (Y bn) (Y bn) 2004 2006 plan 2004 2006 plan 2004 2005 2006 plan 2004 2005

Asia Asia Asia Americas Americas Americas Europe Europe Europe Reinsurance Reinsurance Reinsurance Asia Asia Asia Americas Americas Americas Europe Europe Europe Reinsurance Reinsurance Reinsurance

2005 2005 2006 plan (FY) 2004 2006 plan 2004 2006 plan 2004 2005 2006 plan 2004 2005 2005 2005 2006 plan

Together with contributions of Aviva’s Asian operation purchased two years ago and Mingtai also

acquired last year, the Asian region is expected to make a significant growth.

The operations in Europe and the Americas underwent temporary setback in net income in fiscal

2005 because of the unusual large-scale accidents. The reinsurance subsidiaries saw a fall in net income in fiscal 2005, affected by the hurricanes in the U.S.

Major overseas developments in fiscal 2005 Major overseas developments in fiscal 2005

May 2005 May 2005 Business alliance concluded with Ingosstrakh Insurance Company Ltd. of Russia Jul 2005 Jul 2005 Representative offices opened in Moscow and St. Petersburg, Russia Jul 2005 Jul 2005 Permission granted to offer autophysical damage insurance in China for the first time to Japanese insurer Sep 2005 Sep 2005 Purchased 100% of the stock of Mingtai Fire & Marine Insurance Co., Ltd. of Taiwan Jan 2006 Jan 2006 MSIG Holdings (Asia) established as headquarter in the Asia region Feb 2006 Feb 2006 Capital injected additionally to Mitsui Sumitomo Insurance London Ltd. in the U.K.

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Group businesses: Overseas (2) Performance of overseas subsidiaries, etc. Group businesses: Overseas (2) Performance of overseas subsidiaries, etc.

Region Region 50.7 ASEAN ASEAN 18.1 Europe Europe 28.2 U.S. U.S. 52.7 Chinese zone Chinese zone 1.8 India India 5.5 Brazil Brazil

• Rep. offices

Russia Russia 34.9 Reinsurance Reinsurance 191.9 Total Total Investment Investment 63.9 67.0 32.6 59.0 5.6 10.6

• 18.8

2,59.2 Premiums Premiums 5.4 2.8 0.1 1.9 0.0

• 1.4
• 4.3

4.7 Net income Net income 11.0 15.5 0.4 3.6 0.0

• 25.4
• 12.3

2.4 ROI (%) ROI (%)

“Investment”: investment in equity as for an acquired business, stated capital as for an existing subsidiary, however no amount as for MSI’s branch used for this calculation purpose. “Premiums”: gross premiums written for fiscal 2005 “Net income”: based on equity share

• “ASEAN” includes South Korea.
• “Subsidiaries” include figures of

branches in the respective regions.

(unit: Y bn; %)

• Accumulated amount invested in underwriting business abroad totaled to about Y190 bn as of Mar 31, 2006 with

annual gross premiums of about Y 260 bn for the year ended that date.

• Subject to approvals from the local authorities, the overseas organization is under transformation into a tripod

system of the holding companies (“H/C”s) covering Asia, the Americas and Europe, respectively, to facilitate prompter decision making and business execution, fitting better to the local markets.

Overseas organization under H/Cs Overseas organization under H/Cs

Executive officer, Executive officer,

• verseas business
• verseas business

H/C in Asia H/C in the Americas H/C in Europe Reinsurance subsidiaries

Hong Kong Thailand Singapore Malaysia Indonesia Philippines Vietnam

Subsidiaries in Asia Subsidiaries in the U.S.,Canada Subsidiaries in Europe

Taiwan India China Australia South Korea Russia Brazil

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Group businesses: Overseas (3) <Strategy in Asia> Group businesses: Overseas (3) <Strategy in Asia>

Performance of Performance of Aviva Aviva and and Mingtai Mingtai

Fiscal year 2004 2005(*) 2006(*) 2004 2005(*) 2006(*) Gross premiums written 36.3 38.2 39.5 39.4 41.2 41.3 Loss ratio 44.9% 44.5% 46.2% 52.9% 61.4% 52.2% Espense ratio 44.9% 41.7% 46.5% 31.5% 35.8% 38.6% Net income (after tax) 3.0 3.8 2.9 0.9 0.9 0.9 Net income (equity basis) 2.0 2.9 2.7 0.9 0.9 0.9 Net income in consolidation(*2) 2.0 2.7 0.0 0.1 0.9 Aviva (Asia) Mingtai

(Y bn) (*) Preliminary forecast for fiscal 2005, plan for 2006 (*2) Net income in consideration: before write-off of good will and consolidation adjustment Business transfer completed at all the 15 offices, ending with Taiwan branch in Mar 2006 Continuously expanding: Retains Aviva’s management and staff, and exceeded the goal

by Y0.8 bn.

Aviva (Asia) Aviva (Asia)

Symbiosis between Mingtai and MSI’s Taipei branch, strong in the local and Japanese

corporate markets, respectively

Combined ratio running stably, marking below 90% for these 5 years

Mingtai Mingtai

3 4 5 6 7 8 9 10 2004 2005 2006 China Taiwan Indonesia Singapore Thailand Malaysia Philippines

（%） Sources: IDE-JETRO Macroeconomic background in Asia Macroeconomic background in Asia

Outlook of growth ratio in major Asian economies Outlook of growth ratio in major Asian economies

The macroeconomic conditions in the major Asian economies seem generally firm. In addition, as automobile ownership is dramatically increasing, insurance demand is expected to grow continuously

Automobile ownership in major Asian countries Automobile ownership in major Asian countries

4 5 6 7 8 2001 2002 2003 2004

(mn cars)

Indonesia Indonesia 10 15 20 25 30 2001 2002 2003 2004 China China 4 5 6 7 8 2001 2002 2003 2004 Malaysia Malaysia

Source: World Motor Vehicle Statistics

(mn cars) (mn cars)

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500 1,000 1,500 2,000 2,500 2001 2002 2003 2004 2005 2006 plan

Group businesses:

Mitsui Sumitomo Kirameki Life Insurance

Group businesses:

Mitsui Sumitomo Kirameki Life Insurance

New policy amount New policy amount Amount in force Amount in force

(Y bn) (FY)

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2001 2002 2003 2004 2005 2006 plan

(Y bn)

Goals in Stage I Goals in Stage I

(FY)

No.1 in growth rate of amount in force No.1 in growth rate of amount in force among the non-life insurers among the non-life insurers’ life units life units Get prepared to achieve No.1 in new policy Get prepared to achieve No.1 in new policy amount among non-life insurers amount among non-life insurers’ life units life units Corporate quality improvement Corporate quality improvement

Fiscal 2005 results Target for fiscal 2006 Y1,791.6 bn Y1,970.0 bn 103.4% vs fiscal 2004 110.1% vs fiscal 2005 Y7,917.9 bn Y8,960.0 bn 115.5% vs Mar 2005 113.2% vs Mar 2006

Comprehensive net income

Y4.5 bn Y5.0 bn New policies Amount in force

Major strategy Major strategy Evolutionary business model centering around cross-sales Evolutionary business model centering around cross-sales

Life Playing Leaders to be rooted institutionally, reinforced to 200

and placed nationwide

Increase Loyal Members (recognized agents) as of Nov 04 as of May 05 as of Nov 05 as of Apr 06 1,413 agents 1,600 agents 1,808 agents 2,012 agents

Sales force of Sales force of Kiramki Kiramki’s own organizing: 109

• wn organizing: 109 (as of Apr 06)

(as of Apr 06)

Amount in force has reached Y7.9 tn at MSI Kirameki. MSI Kirameki is running to catch up the 2nd, after narrowing the gap to Y 28.3 bn as

• f Mar 31, 2006.

Measures to strengthen the sales force: Place the “Life Playing Leaders,” who are

MSI employees and exclusively engaged in life insurance sales, nationwide to help life agents increase sales with cross-sale of MSI’s non-life products.

Agents, with the output exceeding a certain level, proactively managing to offer life

insurance are recognized “Loyal Members” by MSI.

The number of MSI Kirameki’s own direct salespersons has reached a 100-people

level.

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Group businesses: MSI Kirameki

Embedded value (“EV”)

Group businesses: MSI Kirameki

Embedded value (“EV”)

EV EV

54.1 Net asset value Net asset value As of Mar 2005 As of Mar 2005 54.8 As of Mar 2006 As of Mar 2006 67.4 Amount in force Amount in force 83.7 121.5 Total Total 138.6 29% Growth ratio (*) Growth ratio (*) 14%

(Y bn)

As of Mar 2005 As of Mar 2006

Y20 bn Initial capital Initial capital Y10 bn Apr-1998 injection Apr-1998 injection Y25 bn Sep-2004 injection Sep-2004 injection Y138.6 bn EV as of Mar 2006 EV as of Mar 2006 Oct 1996

Breakdown of change for fiscal 2005 Breakdown of change for fiscal 2005

+10.7 Factor Factor

Change amount Change amount

+5.5 +0.8

• 0.1

+17.0 New policies written New policies written Expected return on Mar-05 EV Expected return on Mar-05 EV Assumption-results variance, etc. Assumption-results variance, etc.

Interest rate fluctuation, and

• ther investment-related effects

Interest rate fluctuation, and

• ther investment-related effects

Total Total

Y17.0 bn increased (growth rate of 14%) Y17.0 bn increased (growth rate of 14%)

Y17.0 bn increased

(Y bn)

Y121.5 bn Y121.5 Y121.5 bn bn Y138.6 bn Y138.6 Y138.6 bn bn

Y55 bn Total Total

(*) excluding capital injections

Change (Y bn) Change (Y bn) +0.25% ＋6.5

• 10%

＋2.8 Interest rate

• 0.25%
• 6.5

Expenses +10%

• 2.8
• 10%

＋8.5 800%? 600% ＋0.8 Mortality +10%

• 8.4

Solvency margin ratio 800%? 1000%

• 1.3
• 10%

＋3.2 7%? 6% ＋7.4 Cancellation rate +10%

• 3.0

Discount rate 7%? 8%

• 6.5

Improvement by 10% in “Mortality” and “Cancellation rate” means they drop by 10%, for example from 5% to 4.5%.

Mar 31, 2005 (before revision) Mar 31, 2006 Accident frequency Based on the 3-year historical data of MSI’s claims and the industry-wide statistics Cancellation rate Based on the 3-year historical data of MSI’s cancellations and the industry-wide statistics Expenses Based on the expenses paid for the previous year Investment management (New investment calculated at the average yield in the previous year) Invested new money in 10-year, 20-year and 30-year JGBs Yield applicable to new investment 10-year JGB --------------1.55% 20-year JGB --------------2.13% 30-year JGB --------------2.46% Yield in landmark fiscal year Fiscal 2006: 1.64% Fiscal 2010: 1.69% Fiscal 2015: 1.92% Fiscal 2020: 1.91% Invest new money in 10-year, 20-year and 30-year JGBs Yield applicable to new investment 10-year JGB --------------1.46% 20-year JGB --------------1.98% 30-year JGB --------------2.34% Yield in landmark fiscal year Fiscal 2006: 1.69% Fiscal 2010: 1.69% Fiscal 2015: 1.89% Fiscal 2020: 1.90% Solvency margin ratio Maintains 800% at lowest 7% 7% Discount rate (as composition of risk-free interest rate plus risk premium)

EV sensitivity EV sensitivity Assumptions for EV calculation Assumptions for EV calculation

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Group businesses:

Mitsui Sumitomo MetLife Insurance

Group businesses:

Mitsui Sumitomo MetLife Insurance

0.0 39.2 189.5 477.4 885.6 1,591.0 689.8 13 23 47 30 19 20 30 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 startup Mar 03 Sep 03 Mar 04 Sep 04 Mar 05 Mar 06 5 10 15 20 25 30 35 40 45 50 Amount in force

• No. of agents

Rapid expansion Rapid expansion Rapid expansion

Y1,591.0 bn (Mar 2006) Amount in force Amount in force 47 agents (Mar 2006) Number of agents Number of agents Excellent new product development Excellent new product development Excellent new product development (1) New-type variable annuity insurance* (1) New-type variable annuity insurance*

On sale Apr 2005 On sale Apr 2005

24,462 policies New policies New policies 26 companies OTC financials OTC financials Premiums written Premiums written

FY 2005 results FY 2006 plan Y194.8 bn Y280.0 bn

(2) Early benefit lifetime annuity plan (LG type) (2) Early benefit lifetime annuity plan (LG type)

On sale Jan 2006 On sale Jan 2006

Premiums written Premiums written

FY 2005 results FY 2006 plan Y12.2 bn Y220.0 bn (Y bn) *(total annuity value guaranteed) *(total annuity value guaranteed)

Amount in force grew rapidly to Y1,591 bn as of Mar 31, 2006 at MS MetLife. A series of new products, to which the product development capability

strengthened through the alliance with MetLife, Inc. of the U.S., is applied, is good sellers.

(1) The pool of premiums paid in are continuously invested in the segregated account even during the annuity benefit period. (2) Minimum total annuity value, which is fixed at an amount calculated by multiplying basic insurance payout as of the commencement date of the annuity benefit period by a certain rate (105%, 110% or 115%) specified according to the type of rider, is guaranteed regardless of investment performance.

Features of the total annuity value guaranteed plan Features of the total annuity value guaranteed plan 1 1

(1) Investment continues in the segregated account even after the annuity benefit period has commenced. (2) The annuity benefit period may commence at least one year after the contract date, and a recipient can receive, for the rest of his/her life, regular benefit of an amount calculated based on the premium installment period from the contract date. (3) A step-up function, which resets the regular benefit amount upwards every five years, linking to investment return, if it improves, is provided during the annuity benefit period.

Features of the early benefit lifetime annuity plan Features of the early benefit lifetime annuity plan (LG: Lifetime Guarantee type)

(LG: Lifetime Guarantee type)

2 2

14

14

• 2.8

91.2 88.4 48%

Group businesses: MS MetLife Insurance

Embedded Value

Group businesses: MS MetLife Insurance

Embedded Value

EV EV

6.2 Net asset value Net asset value As of Mar 2004 As of Mar 2004 As of Mar 2005 As of Mar 2005 53.3 Amount in force Amount in force 59.4 Total Total 33% Growth ratio(*) Growth ratio(*)

（Y bn)

As of Mar 2005 As of Mar 2006

Y3.0 bn Initial capital Initial capital Y3.1 bn FY2002 injection FY2002 injection Y22.4 bn Y117 bn Y40.2 bn FY2003 injection FY2003 injection FY2004 injection FY2004 injection Total Total Y88.4 bn EV EV Jul 2002 +10.3 Factor Factor Change Change +4.2 +14.5 +29.0 New policies written New policies written Expected return on Mar-05 EV Expected return on Mar-05 EV Assumption-results variance, etc. Assumption-results variance, etc. Total Total

Breakdown of change for fiscal 2005 Breakdown of change for fiscal 2005

Y29.0 bn increased (or 48% increase) Y29.0 bn increased (or 48% increase)

(Y bn)

Y29.0 bn increased Y59.4 bn Y59.4 Y59.4 bn bn Y88.4 bn Y88.4 Y88.4 bn bn

(*) excluding capital injections

Embedded value of MS MetLife Embedded value of MS MetLife

In case where return of the segregated account has fallen by 0.5 percentage points :

• Y5.5 bn

In case where cancellation rate has worsened by 10 percentage points:

• Y0.7 bn

In case where mortality rate has worsened by 10 percentage points:

• Y0.6 bn

In case where discount rate has been lowered from the current level of 7% to 6%:

+Y5.9 bn

In case where discount rate has been raised from the current level of 7% to 8%:-Y5.1 bn

Change in EV

Sensitivity analysis Sensitivity analysis Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2

EV of Y88.4 bn, equivalent to more than 2 times of the investment, has been created for 3 and a half years since its

establishment.

EV of new policies has totaled to Y10.3 bn, generated from the new policy of Y555.0 bn written for fiscal 2005. Variance between the assumptions and the results is an amount of difference arisen from deviation of the actual

results (of yield in the segregated account, cancellation rate, mortality rate, discount rate, etc.) for fiscal 2005 from the assumptions used for the EV calculation in fiscal 2004. Due to the higher share prices in fiscal 2005, the value of the variable annuity assets increased by Y14.5 bn.

Mortality rate is set based on the recent 2-year historical data of MSI’s results and the industry-wide statistics. Cancellation rate is set based on the historical data of MSI’s results and the industry-wide statistics in the prior years. Expense ratio is a coefficient of expenses to the number of policies based on the historical data of expenses in the prior years and the budget plan of income and expense. Return on investment in the segregated account is set equivalent to the return of portfolio investment in the respective kinds

• f insurance (by applying 5% to equities, 2% to bonds, 3% to foreign bonds and 0% to short-term funds).

Solvency margin should be maintained above 600%. Discount rate is set based on risk free interest rate plus risk premium, which is 7%.

Calculation assumptions Calculation assumptions

Note Note １ １ １ １ １ １ １ １

15

15

Group businesses: Financial Services Group businesses: Financial Services

Guarantee on securitized products, securitization arrangement Credit derivatives business Inwards reinsurance from financial guarantee companies in the U.S.

Financial guarantee Financial guarantee Financial guarantee

Risk solutions to the situations difficult to be covered by insurance

ART business ART business ART business

Total contract amount outstanding: Y4.3 bn as of Mar 31, 2006

Weather derivatives Weather derivatives Weather derivatives

Proposal of JIP general-type plan, etc. to mid-tier and small-size companies Corporate-type 401(k) adopted at 969 companies with total balance of Y36.3 bn

as of Mar 31, 2006

Defined contribution servicing Defined contribution Defined contribution servicing servicing

Clients’ asset in trust: Y786.8 bn as of Mar 31, 2006

Investment trust Investment trust Investment trust

Clients’ asset under discretionary account: Y2,424.6 bn as of Mar 31, 2006 Total investment trust: Y2,152.4 bn as of Mar 31, 2006

Asset management Asset management Asset management

Invested in 26 ventures Total investment balance: Y3.6 bn

Venture capital Venture capital Venture capital

Representative corporation Representative corporation Participant corporations (employees) Participant corporations (employees)

Asset custodian (trust bank) Asset custodian (trust bank) Product seller (MSI) Product seller (MSI) Nihon Jinji Soken (“JIP”) Nihon Jinji Soken (“JIP”) JIP 401(k) promoter JIP 401(k) promoter

MSI JIP general-type 401(k) annuity agreement

Various services

Tie-up

Agreement drafting

Other than extending guarantee on securitized products, manages the programs for medical institutions to securitize their receivables for medical services. Guarantee and securitization arrangement As protection seller, writes mainly corporate and asset credit risks of A- or higher rate. Credit derivatives business

Overview of financial guarantee business Overview of financial guarantee business

Accepts reinsurance from the major U.S. financial guarantee companies. Continuously exchanges staff with MBIA, an alliance partner and world’s leading financial guarantor, in addition to reinsurance deals. Inwards reinsurance business

Defined contribution servicing (JIP general-type 401(k))

“MSI JIP general-type” is an original package program developed for medium- and small-size companies in

cooperation with Nihon Jinji Soken.

Reasonable initial and running costs and simple procedure have become available by designing the program under

which an applicant company joins under the already approved corporate annuity agreement.

Servicer: MSI Servicer: MSI

instructions transactions

16

16

Group businesses: Risk-related business Group businesses: Risk-related business

Consulting firm in various areas, including; general risk consulting, CSR management,

environmental risk diagnosis, accident prevention diagnosis, etc.

Net sales: Y1.1 bn for fiscal 2005

Inter-Risk Research Institute & Consulting, Inc. Inter-Risk Research Inter-Risk Research Institute & Institute & Consulting, Inc. Consulting, Inc.

介護事業 ＜訪問介護事業 ・介護専用型有料老人ホーム運営＞ 契約者向け介護関連サービス 2005年度売上高 約13億円

三井住友海上 三井住友海上 三井住友海上 三井住友海上 ケアネット ケアネット ケアネット ケアネット 三井住友海上 三井住友海上 三井住友海上 三井住友海上 三井住友海上 三井住友海上 三井住友海上 三井住友海上 ケアネット ケアネット ケアネット ケアネット ケアネット ケアネット ケアネット ケアネット

Appraisal of corporate and intangible assets (trade name, corporate value, copy rights, etc) Evaluation of machinery and equipment Property appraisal Net sales: Y0.2 bn for fiscal 2005 Health care services, including attendant dispatching and management of pay nursing home

for the elderly

Care-related service for policyholders Net sales: Y1.3 bn for fiscal 2005

Mitsui Sumitomo Insurance Care Network Co., Ltd. Mitsui Sumitomo Mitsui Sumitomo Insurance Care Insurance Care Network Co., Ltd. Network Co., Ltd.

Road assistance service, etc. Net Sales: Y1.8 bn for fiscal 2005

American Appraisal Japan American Appraisal American Appraisal Japan Japan Interpartner Assistance Japan Interpartner Interpartner Assistance Japan Assistance Japan

Inter-Risk Research Institute & Consulting Inc. Consulting service lineup Inter-Risk Research Institute & Consulting Inc. Consulting service lineup

General risk consulting, corporate risk analysis and assessment, etc. Captive management risk financing, etc. Support in accident prevention planning, manual drafting, etc. CSR management system, etc. Planning to reconstruct a crisis management system, etc. Directors and officers liability indemnities, etc. Environmental risk diagnosis, ISO 14001, diagnosis of land and groundwater contamination risks, etc. Medical-related risks and welfare-related risks Product liabilities, ISO 9001, HACCP system, etc. Property risk diagnosis, accident prevention diagnosis, safety diagnosis, etc. Earthquake risks, and windstorm and flood risks Workers’ accidents and safety (lectures, trainings, and other supports) Information security and personal information protection

General risk management Risk financing Crisis management system CSR and legal compliance Crisis management Legal risks Environmental risks

Medical and welfare risk management Product safety and quality risk management

Risk survey Natural disasters Workers’ safety

17

17 Re-design the products and their policy clauses to be composed of universal components Standardize provisions different among the product lines Abolish unnecessary products and policy clauses Re-design the systems to be composed of universal components Systems to be shareable among and reusable in the various product lines Re-design the administrative process and the rules to be composed of universal components (or standardize them) Simplify the procedures Standardize the claims-handling process Improvement in developing diverse and timely products Quick offer of well-fitting, tailor-made products System development meeting market needs Higher sales support function Reduction of operation mistakes; Higher time efficiency at the agents and the administration division; Higher claims-handling quality

MSI: Course of Product Reform: “universal component designing” MSI: Course of Product Reform: “universal component designing”

Effects aimed at Effects aimed at Products Products Products Computer systems Computer Computer systems systems

Application and

• perational

process Application Application and and

• perational
• perational

process process

Major points of review Objective

Simplify Simplify Complicated Complicated policy clauses policy clauses Simplify Simplify Standardize Standardize Difficult to use Difficult to use Diverse and Diverse and complex complex

Products meeting customers’ needs and easy for them to

understand on sale

Quick reimbursement by the claims-handlings service

Reducing error chances through standardizing the

administration processes diverse and complex among the product lines.

Time-efficient paper work to save more time for sales

Improves quality of the reimbursement service (in promptness and accuracy of payout to

the claimants)

Makes reimbursement experience sharable among the employees by standardizing the

claims-handlings process

Flexibly adaptable to the respective car dealers’ needs with tailor-made policies (in respect

• f riders and policy layout, etc.)

Able to provide important corporate clients with tailor-made contracts (and riders) and

thereby meet their needs appropriately.

Able to get relieved from questions from agents Able to launch new products timely to hit the market

Benefits aimed at in the Product Reform Benefits aimed at in the Product Reform

Review particulars of the

products, including their policy clauses and rules, and make the products easier for customers and agents to understand

Policyholders Agents Production

• ffices,

Underwriting division and Administration division The claims- handlings division

18

18

MSI: First reform realization:

New automobile insurance (effective August)

MSI: First reform realization:

New automobile insurance (effective August)

New edition of New edition of re-arranged policy clauses re-arranged policy clauses

Make it easier Make it easier Make it easier

Clear and easy text Clear and easy text

• f provisions
• f provisions

Simplified indemnity Simplified indemnity provisions provisions Pamphlets revised Pamphlets revised

First Class First Class More attractive More attractive More attractive Personal Injury Plus Personal Injury Plus

Lawyer Lawyer’s support in a 2 s support in a 2nd

nd-

party-liable accident party-liable accident

Modo Modo-rich

• rich

Premium pricing Premium pricing

Version up Original NEW NEW

Rate raised in physical damage and SAI-MSB Rate raised in physical damage and SAI-MSB Traffic accident injury eliminated from Traffic accident injury eliminated from the coverage of passengers the coverage of passengers’ injury

injury insurance

insurance

Overall premium slightly down (Rate increased in the major components in real terms) Overall premium slightly down (Rate increased in the major components in real terms) The new edition of policy clauses is designed to be comprised of three parts of “indemnity,”

“injury” and “vehicle” and used universally for MOST Personal, MOST Commercial and SAI.

The colors of green, orange and blue of the trade mark, “MOST is the Best,” represent

compensation to injured policyholder and his/her family, compensation of damage liability and injury to the second party and compensation of the policyholder’s vehicle’s damage.

Major review points Major review points Re-compose the parts of policy clauses and re-write the text of clauses to make it easy to understand Re-define the insurance objectives Review the compensation clause Standardize and improve the rules

Making products easier to understand Making products easier to understand 1 1

Version up of MOST First Class Personal Injury Plus available apart from the package New service of lawyer’s support in an accident which the second party is liable for, including a lawyer fee rider and lawyer introduction services Other revisions (such as a new rider of medical compensation to be doubled according to physical region and condition)

More attractive products More attractive products 2 2 Administration improvement Administration improvement 3 3 Revision of premium rates Revision of premium rates 4 4

19

19

MSI: Progress in Sales Network Reform and channel structure MSI: Progress in Sales Network Reform and channel structure

Increase new agent; Increase new agent; Promote agent Promote agent integration integration Build a network Build a network

• f 50,000 powerful
• f 50,000 powerful

agents by Mar 08 agents by Mar 08 Foster and increase Foster and increase large-scale agents large-scale agents Grade up the agents; Grade up the agents; Increase powerful, Increase powerful, top tier agents top tier agents

• No. of agents: new, cancelled and total
• No. of agents: new, cancelled and total
• No. of agents: new, cancelled and total

2,740 3,049 3,195 6,609 6,893 7,637 50,000 66,380 62,536 57,639 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 10,000 20,000 30,000 40,000 50,000 60,000 70,000 New Cancelled Total

Sales network transformation Sales network transformation Sales network transformation

Top tier Mid-tier Small-scale tier Increased by the upgrade effort Increased by the upgrade effort Decreased by the integration effort Decreased by the integration effort

Foster and incorporate large-scale agents Foster and incorporate large-scale agents

Incentive of new special classification (New Professional, New DL, etc.) Activation through MSA (MSI’s agency organization) Careful management guidance in tie-up with MSI Agency Service

About 300 agents increased in the top tiers from Mar. 04 About 300 agents increased in the top tiers from Mar. 04 About 8,000 agents decreased in the small-scale tier from. Mar. 04 About 8,000 agents decreased in the small-scale tier from. Mar. 04

agents 1 - 3 years old agents over 3 years old AAA ＡＡ ＡＡ ＡＡ ＡＡ Ａ Ａ Ａ Ａ Total 7 agents （5 co.s） 8 agents 189 agents 204 agents

32.3% 67.7%

(on a basis of direct premiums written)

Agents are growing bigger owing to the careful management guidance, fitting to the respective channels, by giving an incentive of the new special classification and management assistance from the staff

• f MSI Agency Service

The new agents of high operation quality and

continuous employment of trainees for the agent contribute to revenue increase.

The new agents 1 to 3 years old account for about

1/3 of the revenue increase from all agents.

Growth potentiality should be retained by

continuously opening new agents

Revenue increase by the effect of new agents Revenue increase by the effect of new agents

Share of new agents 1 - 3 years old in the revenue growth of all agents

Revenue increase by agent channel Revenue increase by agent channel

Growth rate in revenues by channel

channel revenue growth rate professionals ＋2.6% corporates ＋5.0% car dealers ＋6.8% financials ＋5.4%

• thers

＋1.5%

Agents recognized as new special class professionals

* Accumulated number of the recognized agents as of Mar 06

(on a basis of direct premiums written)

20

20

MSI: “Customers-viewpoint” approaches MSI: “Customers-viewpoint” approaches

Open new agents of high business quality Foster agents; Incorporate them

（by an incentive of new special classification of professionals and careful management guidance)

Integrate agents under better custom service performers

Sales Network Reform Sales Network Sales Network Reform Reform

Enhance the training program for agents Increase customer communications by delivering “Anshin Otodoke-bin” Simplified and quicker new policy input with the “Mobile MS1” device

Agent Business Process Reform Agent Business Agent Business Process Reform Process Reform

Build a business style, “originating from customers’ needs,” with the strong

cutting edge to meet them

Marketing Conduct Reform Marketing Conduct Marketing Conduct Reform Reform

Improvement in meeting customers Improvement in meeting customers’ ’ needs needs Intends to build a system to provide customers with better services “originating from customers’ needs” by inter-connecting Sales Network Reform, Agent Business Process Reform and Marketing Conduct Reform

Towards improving customer services Towards improving customer services

Approach in Agent Business Process Reform Approach in Agent Business Process Reform

Customer Customer Customer Foster agents of higher business quality by the enhanced training program

Agent training

Enriched content and timely delivery of information

*About 35,000 agents introduced

Agent-use MS1

New product ads and various kinds of information delivered by DM and facsimile

Anshin Otodoke-bin

Cashless and paperless procedure of the policy application

Mobile MS1

Higher business quality Higher business quality Improvement of communication and customer services Improvement of communication and customer services

MSI MSI MSI Agent Agent Agent

21

21

MSI: Towards reducing loss ratio of automobile insurance to an appropriate level MSI: Towards reducing loss ratio of automobile insurance to an appropriate level

Claims-handling Service Reform Claims-handling Service Reform Product Reform Product Reform Sales Net Work Reform Sales Net Work Reform

Reinforce medication- related staff; Review workforce, organization and reimbursement process Commission table reflecting loss ratio performance of the respective agents Increase the denominator and decrease the numerator by revising premium rates and reviewing coverage scopes

65.2% 61.6% 61.7% 69.2% 70.5% 61% 63% 65% 67% 69% 71% 2001 2002 2003 2004 2005 2006

I/E ratio of automobile insurance I/E ratio of automobile insurance

(1) Increase in IBNR statistically calculated, etc. ＋1.6% (2) Effect of the “2006 Heavy Snowfall” ＋0.6% (*) (3) Effect of natural disasters －1.7% (4) Changes in accident frequency and average reimbursement per claim due to other factors ＋0.7% ＋1.2%

Major factors of the rise in I/E ratio for fiscal 2005 Major factors of the rise in I/E ratio for fiscal 2005 1 1

* The “natural disasters” include the typhoons and downpours of rain but exclude the heavy snowfalls. (1) Increase in IBNR statistically calculated, etc in fiscal 2005. -1.3% (2) Counter-effect of the “2006 Heavy Snowfall”

• 0.6%

(3) Effect of natural disasters +0.3% (4) Effect of revised rates and policy clauses

• 0.4%

(5) Results of counter-measures against agents of high loss -0.4% ratio, and others

• 0.4%
• 2.4%

I/E ratio plan for fiscal 2006 I/E ratio plan for fiscal 2006 2 2

Major factors of improvement in I/E ratio (FY)

22

22 90.5% 95.3% 87.0% 87.6% 92.1% 94.2% 86% 88% 90% 92% 94% 96% 2001 2002 2003 2004 2005 2006 (plan) 36.6% 33.4% 32.2% 31.3% 30.8% 30.9% 30% 31% 32% 33% 34% 35% 36% 37% 2001 2002 2003 2004 2005 2006 (plan)

MSI: (non-consolidated) Domestic non-life business:

Net business expense ratio

MSI: (non-consolidated) Domestic non-life business:

Net business expense ratio

Combined ratio Combined ratio Net expense ratio Net expense ratio

(FY) (FY)

Underwriting company expense ratio Underwriting company expense ratio

17.7% 17.0% 16.5% 16.4% 16.3% 16.2%

15% 16% 17% 18%

2001 2002 2003 2004 2005 2006

Agent commission ratio Agent commission ratio 18.7% 16.4% 15.6% 14.9% 14.4% 14.7%

14% 15% 16% 17% 18% 19%

2001 2002 2003 2004 2005 2006

(FY) (FY)

23

23 Increase average life of the assets and decrease interest rate risks by hedging on the liabilities’ side Sell parts of equities to reduce risk on Japanese equities and reallocate the proceeds Increase credit risk assets such as personal loans Increase alternative investment

Investment management strategy Investment management strategy

Investment portfolio Investment portfolio

376.2 372.5 225.5 218.2 771.2 756.1 101.3 124.0 1,021.7 1,133.8 2,008.8 2,851.4 1,710.0 1,744.1 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Mar 2005 Mar 2006 (Y bn) Bonds Equities Foreign sec's Other sec's Loans Real Estate Others

Increase in interest and dividend income Increase in interest and dividend income

79.1 51.9 136.9 110.4 20 40 60 80 100 120 140 160 Mar 2005 Mar 2006 (Y bn) Net interests + dividends Gross interests + dividends

Management guidelines Management guidelines

Personal loans Mar 2004 Mar 2005 Mar 2006 294.1 327.1 347.2 Mar 2004 Mar 2005 Mar 2006 59.3 77.8 106.5

(Y bn)

Investment environment factor Domestic non-life insurance Life insurance Higer share prices Increase in market value of the equities held +Y155 bn per 1,000-yen rise in the Nikkei Average Increase in EV Interest rate hike Increase of net asset value in the general and segregated aaccounts; Increase of interest and dividend income Decrease in EV Yen appreciation Decrease in yen value of the assets in foreign currencies Decrease in yen value of the reserves in foreign currencies No change Changes in the macroeconomic environment Changes in the macroeconomic environment Corporate and government bonds increased Corporate and government bonds increased Personal loans and alternative investment risen gradually Personal loans and alternative investment risen gradually Bond portfolio (Y bn) Alternative investment

(Y bn) Mar 2006 173.7 237.0 1,333.5 Mar 2005 1,268.1 179.6 262.3 Governmental Munucipal Corporate

24

24 Cash dividends: basically intends to keep increasing Share buyback: decrease 10% of the number of the shares outstanding as of the establishment date of

Oct 1, 2001 by 2010

Capitalization policy (1) Guidelines of return to shareholders Capitalization policy (1) Guidelines of return to shareholders

2 4 6 8 10 12 14 2001 2002 2003 2004 2005 2006 (FY) (Yen per share)

10 20 30 40 50 60 70 80 2003 2004 2005 (FY) (Y bn) Group Core Profit Dividends + buyback

Distributions to shareholders Distributions to shareholders Cash dividends Cash dividends Return roughly 40% of the Group Core Profit by way of dividends and share buyback Return roughly 40% of the Group Core Profit by way of dividends and share buyback Return roughly 40% of the Group Core Profit by way of dividends and share buyback Distribution amount to shareholders is intended roughly equivalent to 40% of

the yearly Group Core Profit by way of cash dividends and share buyback.

Cash dividends are basically intended constantly increasing, and the dividend

per share for this fiscal year will be 13 yen, 3.5 yen higher per share. Period

• No. of shares (thousand)

Amount (Y mn) Mar 2002 18,895 10,962 Dec 2002 7,000 3,607 Oct - Dec 03 29,381 25,999 Aug - Oct 04 23,073 21,485 Sep 2005 10,000 11,992 Total 88,349 74,048

Shares bought back Shares bought back

25

25

Capitalization policy (2):

Reduction of equities held and use of excess funds

Capitalization policy (2):

Reduction of equities held and use of excess funds

Net asset value Net asset value (NAV) (NAV) Total risk exposure Total risk exposure

[99%VaR] [99%VaR]

Buffer capital for Buffer capital for business continuity business continuity Net excess capital Net excess capital

fluctuation fluctuation

Selling off equities and reducing the position constantly by Mar 31, 2011 ＜Plan to sell equities worth Y500 bn during fiscal 2004 to 2010, including Y140 bn equivalence already sold by Mar 31, 2006＞ Reduction of equities held Reduction of equities held Reduction of equities held

Stabilize the capital level by selling off portion of the equities held Stabilize the capital level by selling off Stabilize the capital level by selling off portion of the equities held portion of the equities held Net excess capital fluctuates as the stock market does. Net excess capital fluctuates as the Net excess capital fluctuates as the stock market does. stock market does. Equity portfolio, half of whose value is unrealized gains, accounts for most of the NAV Equity portfolio, half of whose value is unrealized Equity portfolio, half of whose value is unrealized gains, accounts for most of the NAV gains, accounts for most of the NAV Net Asset Value is composed mostly of the equity portfolio, and the

aggregate unrealized gain of the portfolio accounts for almost a half of its market value.

Once, in future, the stock markets becomes very volatile, both NAV and

net excess capital will undergo turbulence as well.

To evade this fluctuation factor and secure the capital above a preferable

level, parts of the equity portfolio should continuously be sold off.

26

26

Mitsui Sumitomo Insurance: Financial highlights Mitsui Sumitomo Insurance: Financial highlights

*1. “Net premiums written” exclude those of Modorich but include the effect caused by the abolished governmental reinsurance of the compulsory automobile liability insurance (“CALI”). *2. The Core Profit of the “Life Insurance” represents a sum of MSI Kirameki’s net income before NLP reserves and MS MetLife’s equity in earnings by the US GAAP.

FY 2004 results (*1) FY 2005 results (*1) FY 2006

• riginal target

FY 2006 plan

Y1,310.2 bn Y1,338.4 bn Y1,340.0 bn Y1,360.0 bn 64.0% 59.7% 61.6% 61.2% 31.3% 30.8% 30.2% 30.9% 95.3% 90.5% 91.8% 92.1% Y51.9 bn Y79.1 bn Y52.0 bn Y75.0 bn Y60.7 bn Y64.8 bn

• Y68. 5bn

Y70.0 bn Y1,403.2 bn Y1,469.7 bn Y1,484.0 bn Y1,518.0 bn Y28.6 bn Y73.9 bn Y84.0 bn Y80.5 bn 2.0% 4.2% 5.6% 3.9% Y16.3 bn Y64.2 bn Y59.7 bn Y58.2 bn Overseas business Y5.1 bn

• Y1.4 bn

Y10.0 bn Y11.0 bn Y5.7 bn Y8.5 bn Y12.5 bn Y9.5 bn Y1.6 bn Y2.6 bn Y1.7 bn Y1.7 bn Y0.0 bn Y0.0 bn Y0.1 bn Y0.1 bn Y28.6 bn Y73.9 bn Y84.0 bn Y80.5 bn Group Core Profit Net premiums written Net loss ratio Net expense ratio Combined ratio Total Risk-related business ROE（on a GCP basis） Domestic non-life insurance Life insurance (*2) Financial services Interest and dividend income Net income Consolidated net premiums written

Appendix Appendix

Non-consolidation Non-consolidation Consolidation targets Consolidation targets Core Profit by business Core Profit by business